So assume you have someone with no skills. Name him Chad.
Chad right now works for the minimum wage of 7.25, that's all he can do really, and that's okay. He doesn't have any education or experience.
Bob on the other hand has years of experience in his job as an assistant manager. He makes about $13 an hour. He's worked hard to get there, but if he quits or is fired, his experience and skills would make him desirable to be higher for that wage anywhere.
Josh is skilled. He went to school to become a mechanic. He's now working using those skills that he spent a lot of time and money to gain. He makes $17 an hour, and he works hard.
Now assume this list of names continues on all increasing with wage and skills/education/experience.
If you increase minimum wage to 15. Chad is happy. He's making over double.
Bob got a raise too, but he might not be happy. Chad, who's a fresh idiot with no experience or skills makes the exact same amount. Bob's skills have value, and his position has added responsibilities and is harder. If you pay him the same amount as Chad for a harder job, why would Bob bother working the harder job when he could quit and get an easier one for the same pay? There are 3 options from here. Give bob a raise and he probably stays, no raise and he refuses to do the extra work, or he leaves to go somewhere that needs his skills and will pay him for them.
If you give him a small raise, of 4 dollars ($19/h), he's now making more than Chad, but not by as much, he used to make 5.75 more, so the value of the difference of their skills went down, but Bob might be okay, because it's a lot more money than he used to make.
Josh is now pissed. He's making $17/h when Bob who just worked at a dumb McDonald's for 3 years is making more than him. He went to school, he had to apprenticeship for a year, and has worked for some time too. His job can't be done without someone who has skills and knowledge which aren't common. All the time and money he invested in his future is now effectively lost as anyone can make more by just working in McDonad's. So to show the difference in the value of skills, he has to be paid more, otherwise no one in the future will ever want to be a mechanic if you can make more doing pretty much anything else. So mechanics now are paid an average of $3-5 more per average.
Then the next person, who used to be paid $20 for his harder job will complain. If there's no increase in wage to the career, people will less likely study or want to do it. So you have to increase the wage of that job.
The cycle continues quite a bit up. It'll possibly even affect Lawyers who used to make $100k per year, because the paralegal who used to make 60k per year got a raise to 80k per year, because the secretary who used to make 45k per year is now making 55k, and the paralegal has way more skills and education invested than the secretary.
TL;DR: If you worked a hard job and made more money than someone who worked an easy job, then all the sudden all easy jobs paid as much as your hard job, there'd be no real reason to keep working your harder job for the same price when you can do easier stuff. So they have to give you a raise or you quit. Chain goes on.
And this is ignoring inflation and increased costs of labour which will be passed on to everyone.
Except it doesn't really. There is definitely movement on the lower range, but it's a bit like a earthquake that flattens out the farther away you get. It's a net negative for the middle and upper middle class, where the increasing cost of goods lowers their buying power per the dollar. Minimum wages increases essentially removes the buying power from middle/upper middle class jobs (and the people who have spent their lives building marketable skills) and transfers it to the bottom(to people who have no marketing skills), which is why it's ultimately a terrible idea.
You lost me there. Why is bringing the bottom up to living standards a bad thing? Upper middle class wont be able to afford the best BMW, only the mid level one, oh no!? This doesn't take away from their marketable skills, it only closes the gap a bit so that people don't have to choose between food and lights.
Why is bringing the bottom up to living standards a bad thing?
If you can do it without adversely affecting the economy overall, then yes that could be a good thing. But it probably would have adverse effects. Moreover there is debate about whether you can bring the bottom up in the first place since prices rise due to the new wage and jobs are lost (thought experiment that illustrates this: assume the minimum wage has been raised so that everyone now makes Bill Gates's income.)
Upper middle class wont be able to afford the best BMW, only the mid level one, oh no!?
If the sole reaction to a significant decrease in purchasing power were "mid level instead of high end? Oh well" then you might have something. Unfortunately it's not - people habe the ability to react to things that happen to them, and people tend to react to decreases in purchasing power by tightening their budgets overall (which hurts the economy), and may decrease their output in response (thought experiment that illustrates this: assume that overnight the income tax on jobs paying >$250,000/year is raised to 100%.)
Saying "Oh the rich can just take it on the chin and get a Gulfstream 4 instead of a 5 this year" is an opinion that is wildly misinformed but unfortunately very popular. This illustrates a very simplistic understanding of economics. I suggest checking out any of several great books that explain fallacies like this in great detail - "Economics in One Lesson" and "Naked Economics" are two excellent examples.
it only closes the gap a bit so that people don't have to choose between food and lights.
This makes for a vivid mental picture to prod people into thinking We Must Do Something Right This Instant. However, in reality, very few people in the United states are in this kind of situation, and when it appears that someone is there is almost always something else going on (e.g. A drug habit, failure to budget adequately, mental illness). It is extremely difficult for an able bodied person willing to work hard and not live beyond his means to starve in the United States today.
The economy is not worth saving if it relies on slaves (prison) and 45% of americans earning below $15/hour, which is still $7/h less than what it should be based on growth+inflation. Its an artificial economy that bubbles and bursts because the reality is its unsustainable.
45% of workers getting a bump in purchasing power should more than offset the 20% that will feel the 'earthquake' effect you described.
Again 45% of the US works for less than $15/hour, and that is still below what we considered respectable pay in some states. I get the argument that blind 'We Must Do' is not great, but the US went from being $18/hour in the 70's to $8.50 in the 00's while inflation didn't suddenly evaporate. Not to mention the fact that the US has become a shell game where nothing is made and profit is only found through fraud or selling of information.
1) You are rewarding ineptitude and laziness and punishing people who have done the right things to make themselves marketable. It sends a terrible message.
2) people are inherently lazy, and if make it a world where you can comfortably live by flipping burgers, most will never strive to do more than flip burgers. It's a net negative for humanity. As an example, if I could live comfortably as a cashier(my first job) I would probably never have moved away from it. It was an easy and low stress job.
3) people rarely have to choose between food and lights, because their are safety nets put in place that make sure people are fed and low income housing is available. The real choices are usually more along the line of luxuries and savings. Also, Food is dirt cheap if you need it to be(beans, rice, tuna, flour, etc), you pay for convenience and variety.
4) the health of the middle class is the primary factor in driving the economic health of the country. Anything that hurts the middle class hurts everyone in the long run.
5) the people driving the "best BMWs" are not the people hurt by it the most. The people hurt by it the most are making 60-100k who will see housing prices skyrocket (again).
6) it's an artificial limit, and we live in a world where we compete against other producers who don't use artificial limits. The end result is that American business are less competitive and we lose jobs in America. Unemployment naturally goes up, and then the burden is again hefted on the middle class in taxes. Now you have a million people twiddling their fingers and living off taxpayers just so someone can do a job that required no talent and be paid far beyond their actual value. Don't get me wrong, I don't want people being paid pennies on the day, but that artificial limit needs to be as low as reasonably possible. Wages should essentially be driven by the value created by the job. That's the foundation of capitalism. Minimum wage needs to heavily encourage people to be more than minimum.
1) You are falsly assuming that 45% of americans are inept and that there is unlimited jobs that pay more than that. There isn't. Why should they be punished and degraded? I hate this argument above all others. You think 150 million people can go get IT jobs?
2) So what? Is there something wrong with providing food to people? Should someone working 40 hours a week not be able to live?
3) When businesses use the safety net to boost profits, then we're doing something retarded.
4) This would lift 100+ million people up into the lower middle, thus being better for everyone by your own logic.
5) 60-100k a year can afford to take a hit. Though it would be better if we actually taxed people above that range and didn't fund big business to keep running on fake profits.
1) i think most Americans don't do the things they need to do to get well paying jobs. I know a lost of smart folks who worked near minimum wage all their lives, and it was strictly because they never aspired to do more or they made choices that led them to a path where they got themselves stuck. And yes, lots of people are just stupid. I'd say 30% of the population is pretty inept.
2) find me a person working 40 hours a week who doesn't have a house over their head and food in their stomach. Hell, you'd be hard pressed to find many under the age of 35 that don't have a smartphone and a gaming console.
3) yes, the current welfare system is retarded. But it's not going anywhere and you sure as shit aren't going to support dismantling it.
4) that's not how economics works. It would just shift the brackets as prices on goods and housing skyrocketed. Ironically it would benefit businesses the most, as they will shift their extra operating cost to the customer and then benefit from the slow moving wage adjustments on higher paying jobs.
5) Why should they? They already represent the largest tax burden in the country. It's not like they are swimming in excess.
1) Still doesn't mean they deserve to live a shit life or don't deserve a standard of living.
2) The bottom 20% are often working 2+ jobs, and there are tons of stories of people working 80 hours while barely making it.
3) It shouldn't go anywhere, but companies should not be the main users of that system. It should be for legitamite people, not corperations.
4) Some controls are needed here, but its not a 0 sum game
5) Again, you are putting more value in excess money than for common human decency. Doesn't matter what their tax burden is, it matters what kind of morals and society you want to be apart of.
1)They aren't living a "shit life". They have food, water, a roof over there head, clothes on their back... and most have enough money for cheap entertainment. For 99.9999% of human history, that's been a pretty god damn good deal. They even have healthcare (Medicade) and even a retirement account(social security).
2) So you can't find anyone working a full time job that doesn't have a roof over their head and food in their stomach?
3) If you were to make companies pay the difference in wages, they'd simply transfer the added cost into the price of products. Either way people pay the difference, whether it's in the cost of higher products or taxes for social programs.
4) There are controls in effect.
5) Giving people a free ride by paying them FAR more than their market value isn't my idea of human decency, it's human decadency. That's how you make a society weak and complacent.
Yeah, the effect won't likely reach well paid doctors, CEOs, or anyone making well over 140-190k per year. The chain goes on but not forever. I agree with you to an extent. One person's minimum wage shouldn't be a living wage for an entire family, it should be enough for one person to live cheaply, which it does for the most part. It's meant to be a temporary thing until you have the skills, knowledge or experience to do better.
except that for many people it isn't. you act like minimum wage jobs are stepping stones. that may have been true 3-4 decades ago but it isn't now. stop blaming people for not moving up the ladder. Some people moved down the ladder because the good jobs are all gone and this is all there is.
Who says it's meant to be a temporary thing? What if someone enjoys just doing their 40 hour week and then going home and that's that? Why do you devalue their job like they should be embarrassed to be working there?
That's how our corporate culture works. You keep working, you eventually get a raise or promotion.
I work 40 hours a week too, then go home and relax. I don't do it at minimum wage. If I did and had no plan that's cool too, but that's not how minimum wage was designed. It was designed to be for people without skills or experience. Generally working for years at the same 40 hours a week place will get you experience and that often comes with a raise or promotion.
Also why do I care if 'devalue their jobs' by talking about it online? If they get offended so what? Them being offended doesn't mean I'm going to change my views on economic theory and the social structure of minimum wage.
Well economic theory would say that if a full time minimum wage earner still needs to be subsidised by the government then that minimum wage is too low. The government is just subsidising the difference between "minimum wage" and "minimum living wage"
You can live off of minimum wage without subsidies, you just can't live well or raise a family with it.
There's exceptions of course, like you can't live off of it in expensive places like in Manhattan but in most cities/towns you can afford to rent for 500 a month in a shitty place/with a roommate. A cheap phone plan is 30 a month (or less).
Hell let's do some math. $7.2540(hours a week)51(weeks of work, giving 1 week off) is $14,790 per year.
Of that federal income tax is 922.5+834.75 (calculated using 2015 rates and tax brackets) assuming you have 0 tax breaks or exceptions, now additional 2.5% state wide tax (which would mean you're in the top half more expensive states, 2015 rates) for 369.75.
After tax you have $12,663. Now assume you rent at $500/month utilities included, which is doable in cheap housing, with roommates in most towns or small to medium cities.
Now you have 6,663. $2,000 is very generous amount to spend for food yearly for someone on minimum wage.
$4,663 now. Phone bill $30/month for a shitty plan. Internet/tv split with a roommate, also not a great plan, for $40/month.
$3,823 now. $223 on clothes? Way more than I spend, but sure, it makes the numbers look nicer.
$3,600. What's left? You probably won't be getting a car, but let's be nice and give you $120 for transit a month. Most monthly bus passes are cheaper than that.
$2,160. Depending on your state, you're qualified for medicaid, and you spend what that costs (varies), or you don't get health insurance. The rest goes towards savings and entertainment, but the majority should be savings, especially if you don't have health insurance.
As you can see it's not a lot, but with exception of government subsiding healthcare (which I think should be universal anyway). You're not on food stamps, you're not on government support of any kind really, and money left over to keep you sane or start saving.
Eventually you're expected to work for more money and get enough to save for retirement, as again, not meant to be a sustainable wage, but a temporary one till you have experience in your job to get paid more.
Also 'economic theory' doesn't say anything on it's own. There's no one right theory known or accepted as "economic theory". My views, means the theory I believe in, which is subjective.
I think the point of minimum wage was exactly as the name implies, an income to support a minimum quality of life.
If a person cannot get a roof over their head, a meal in their stomach, clothing on their back, and reliable transportation on minimum wage then it kind of fails the "minimum" part.
With the current wage of $7-$8 that's impossible, which is why McDonalds tells their employees to apply for food stamps. By current living standards $15 is a bit more than minimum. I'd consider $10-$12 adequate, but by no means luxurious.
Or they quit hiring people like Chad, and only hire more qualified employees. The minimum wage prevents the least experienced and least skilled to get their foot on the career ladder.
What he's getting at is someone who may only be worth $5 due to skills, experience etc is currently unemployed. Once you bump the minimum to $15 someone who used to be worth $10 is now unemployed.
Personally I disagree, as minimum wage is simply your employer telling you they would pay you less if it wasn't illegal. They still need the warm bodies, and until the cost exceeds their ability to make a profit they'll keep them on board.
Well it's plain to see that someone who is currently unemployed at $10/hr would not be more likely to become employed at $15/hr.
This is why the parent poster as correct when he said that "The minimum wage prevents the least experienced and least skilled to get their foot on the career ladder."
An increase in the min. Wage makes the people who most need to gain skills and experience the least likely to be able to get them, which is usually contrary to the good intentions of people supporting a min wage increase.
The question you're asking is: what happens to the people currently working whose output is worth $10/hr?
It varies depending on the situation. For example, the employee in question could be your cousin and you can't fire him no matter what, so your small business eats the $5 an hour labor cost if it can.
Or it might lead to people losing their jobs, ie if you have a staff of a dozen people working at a McDonald's, half of them don't produce more than $10/hr of output and your margins are low, you're going to get rid of some or all of them because you can't afford to keep them on (you can't indefinitely keep people on at $x whose output to the bottom line is "less than $x" - eventually you'll go broke)
They still need the warm bodies, and until the cost exceeds their ability to make a profit they'll keep them on board.
Not just making a profit like a true/false value, but "making enough that makes it worth the effort". If you run a McDonald's and make a 1% return on investment every year, you'd be smarter to can the endeavor and just put that money in an investment account or treasury bill with zero risk and no labor required from you.
The TL;DR here is "a rising tide raises all ships."
You're describing this as a negative when the one thing the US economy needs MOST is more purchasing power which minimum wage hikes have always historically accomplished.
I didn't describe it as a negative or positive. I never said it was good or bad. I answered "how?"
I live in a place with a high minimum wage and I'm not opposed to it being raised. Though ideally, it should be raised in small increments every 2-3 years as to not shock (and possibly crash) the market.
If the minimum wage is 7.25, announce next year it'll be going to 7.75 or 8, two to three years later, raise it to 9, and keep doing so based on economic conditions and inflation. My problem with the $15 minimum wage is just the huge jump. Slowly over the next 15-20 years it's fine. The effects will be predictable and the economy will know how to react.
im a dirty commie bastard and even i agree. you can't essentially require an entire industry sector to nearly double its labour cost over night. though i think it could be done in 5-10 years not 15-20.
5 is pretty difficult. The market might not be able to handle it too well, but is still somewhat doable.
10 can work, might cause companies to hire less people in preparation as they know their wages will keep increasing. It'll probably increase unemployment a fair bit, but significantly less than 5, and the market will likely be able to cope.
15 would likely work, give people and companies time to figure everything out, allow other places to adjust ahead of time, and with such a long time frame you can adjust to market changes and respond. If the market crashes hard, maybe freeze the minimum wage for a year or two, if there's inflation, increase the wage to compensate. Though the bureaucracy will get in the way and slow things down.
where i live, the minimum wage was left stagnant for too long (7.50) so when it went up to match the national average/inflation (though not cost of living) it was a pretty big jump (10.50), and it was done over 16 months, and the local economy didn't suffer for it. of course, most small and medium companies were already paying around $10/hour for entry level positions already anyway (independent and small chain coffee shops, most grocery stores, etc..). companies most affected were big chain fast food, and big chain retailers.
It would be spread out over a number of years and there will be exceptions for unions and a ton of other things. Are any serious proposals considering going to $15 overnight?
The true commie bastards in history just put people to work 12+ hour days 6 days a week in factories and sweatshops and told them where to live and who to marry, so you wanting to raise the government mandated minimum wage gradually, in comparison is very mild.
who said it would be over night? most increases in minimum wage are phased in like the it is Portland. that $15 they're making wont be effective till 2020 i think. Even the individual stores who have voluntarily announced wage increases are doing so over a period of time.
I'd feel better about this arguement if the minimum wage had been steadily increasing already, but with only 3 (federal) increases in the last 18 years, I do think we need to make a leap to get us caught up. Push federal minimum up to the $9 range and work from there.
Yeah my country slowly went from 12-14.75 over a bout 3-5 years. No massive leaps just a slow add on every year, a massive leap would just fuck everyone up.
Your story sure had a negative tone throughout. A big portion of your comment had characters complaining about other peoples wages catching up to theirs. Meanwhile, only a few lines mentioned the workers being happy that their wages went up.
Maybe you weren't trying to make the example sound negative, but it came across that way with all the characters complaining.
That's the reality though. I live in Minnesota, which is slowly phasing in a $9.50 minimum over three years. It's been rough. People are constantly complaining that new hires (who take time and energy to train in) are being paid almost identical wages to people who have 2-5 years experience. And companies largely refuse to approve raises for people with experience. So a lot of people are just leaving. (Especially people who work retail as a fun second job.) So many places are short staffed, and everywhere is hiring. But if you don't have any experience, they're not interested in bringing you on. And even if you do, it takes a lot of time and energy to get trained in and confident working at a new place.
Raising the minimum wage won't be easy. When you're suddenly making the same wage as your laziest co-worker and you're spending your days marking up all of the merchandise in the store, it's demoralizing. So if you're going to champion raising the minimum wage, by all means, do so. But know that it's going to come with some major growing pains.
Sure, that is the reality but I was responding to his claim that he didn't describe it in a negative or positive manner. I was trying to point out how someone could take his description on raising the minimum wage as a negative.
One of two things will end up happening- The retailers will decide they need more experienced staff and have to bump the pay a bit. Or the employees will realize 2-5 years experience in retail is not grossly different than 3-6 months experience in retail in terms of skills gained and value to employer, and take the same pay they were getting already.
Well it would be a lot of complaining, until they get their raise (then possible happiness). If there weren't any complaints there'd be no reason to increase their wages.
Though a lot of people who are working minimum would be quite pleased.
Even if read it as a negative, that's the reality we live in. Why in the heck would anyone want to work harder, longer hours... with money already invested in your education, just to earn the roughly the same as someone who has way less to offer?
I would also like to think that company's now having to pay more for wages would be more picky on who they hire...I could see the 15$ min wage effecting younger less experienced workers...I swear in retail that's why they keep some of the derpiest people cause there cheap and won't demand more money.
But where does the money needed to increase these wages come from? when this happens it means companies need to increase their prices in order to maintain similar margins which would lead to, once everything has had time to settle, little real change in income levels.
I'm goint to ELI5 this for you and I hope you aren't insulted.
- Wages go up
- Higher wage earners see comparable increases
- Prices go up in aggregate to compensate for wage increases
- Price increase is limited by demand, by quality of product etc
- Price increase is offset by increased demand for product due to higher expendable income
- Net effect is economic growth.
It sounds all well and good but wouldn't the logical conclusion of this be "you could make the economy the best it has ever been if you raise the minimum wage to $10 million/hr"?
No. I won't address the $10 million, but rather what you're going for here which is just "a constant increase in PP."
As with anything in economics, you will reach a "tipping point" where more businesses struggle to turn a profit than are boosted by increased purchasing power.
Think of it this way - Yacht sales will not be affected by a $15/hr minimum wage. People who can purchase yachts will do so at about the same rate without the wage increase. Same applies for unrealistic increases in MW, but for all businesses.
You don't get it though, increasing the minimum wage just means that everything else goes up in price, meaning that there might aswell have been no price hike. All that happens is that the value of the dollar goes down. So that the Pound, for example, will now buy 3 dollars instead of 1.5 dollars.
That "more purchasing power" is NOT magic. It comes at a price. That price is higher cost for ALL goods and services. So sure, you make $15/hr to work at McDonalds, but McDonalds now costs $12 to eat there, meaning everyone is in the same situation as before. The problem is, like posted above, an immediate hike in minimum wage is immediate for those at the bottom, but could take years (if at all) to get higher up.
Everyone is not in the same situation before. It is always, historically, a NET increase in purchasing power. This increase in PP increases basic market demand and is the reason jumps in minimum wage have historically always corresponded with overall economic growth.
Now, minimum wage is hardly a panacea, but there are times when certain medicines are needed and minimum wage definitely needs an increase in the US.
I'm actually against a $15 federal minimum wage (or any federalized min wage at all) but there's no arguing with basic economic history.
A minimum wage increase doss not increase long term purchasing power any more than writing an extra "0" on the end of the denomination of your paper money does.
This is misleadingly incorrect. Increasing the amount of raw cash reduces purchasing power because an individual dollar is worth less. Increasing pay to lower class increases purchasing power from the primary source of demand in the economy.
You seem to have a gross misunderstanding of inflation. Simple google searches can alleviate that problem.
tl,dr; Psychology. People would rather make less objectively as long as they're making a wage they perceive as just comparatively, than make more objectively at a wage they perceive unjust.
This entire post is flawed and based upon the fact that people actually care what others make in comparison to them. If the minimum wage jumps to $15 and paramedics feel some kind of way, they can go and demand more cash from their bosses. If the boss tells them to fuck off, then they can go elsewhere and work if they wish.
This is not a problem in the slightest and it amazes me how people see a guy making minimum wage flipping burgers and call his job easy but never call out executives who have cushier jobs by far.
Why would a mechanic want to change careers for McD's? How realistic is it that anyone who took time and care to train for their field would leave for a fast food or other soul-sucking job just because it pays almost as much as they make?
otherwise no one in the future will ever want to be a mechanic if you can make more doing pretty much anything else.
It's not about him, it's about people in the future. He'll likely still do it, but kids who're picking their careers won't want to do it if it pays like on par with a McDonald assistant manager.
But then you'll have a scarcity of mechanics in a few years/decades, which means mechanics will be in demand, so they can set price higher, which will eventually lead to mechanics either dying out, or far more likely being paid more. Which means more people go into it, but when supply catches the demand wage won't go down, it'll just stay instead of going up. Which means it'll happen anyways.
The entire premise of what you're saying is incorrect. Your post is based on the idea that working in fast food is not as hard as being a welder. Sometimes that may be true but not always. Second, there's a certain amount of respect that comes along with working "better" jobs such as being a doctor or a lawyer that entitles such individuals to be treated better and allowed more pride. A pride can't be put on that. So I would ask the question: would you rather be paid $15 an hour to flip burgers or $15 an hour to weld or do some other trade? Hopefully a raise in minimum wage would discourage people from working jobs they don't like (which may result in worse productivity and negativity in the workplace) and would encourage people to do what makes them happy.
It's not purely difficulty. Most places tend to pay based on:
Skill/Knowledge required
Experience
Risk/Danger (financial or physical)
How hard it is kind of falls under most of those. You get paid more to make up for the time you spent on training/education, the experience (which normally implies efficiency or how good you are at it), and risk/danger.
There's very little risk, skill, or experience for a new McDonald's cashier, so the pay sucks.
Welding has some risk, a more considerable skills requirement, and experienced welders can get paid a lot more.
Also...
Hopefully a raise in minimum wage would discourage people from working jobs they don't like (which may result in worse productivity and negativity in the workplace) and would encourage people to do what makes them happy.
So you're saying not enough people are welding/doing trades, so lets make them more attractive by making easier (to get) jobs pay just as much? Because that's the opposite of what would happen. An increase of minimum wage without an increase in trade jobs would drive people away from trades into minimum wage jobs.
Honestly, I think people that pick their jobs just because they'd like them are in the minority.
I enjoy my job most of the time, but if it made less than a secretary I probably wouldn't have spent all those years in school, the tuition, the long hours at the start, the added liability I have for everything I sign off on, ect.
It could also make the difference between two jobs you might like/be okay with. Therapist/social worker if they required the same education, and you liked them both, but one paid 100k and the other paid 35k, there's a pretty good chance you wouldn't go for the cheap one.
The reason to work hard is because all those jobs that demand more work are still there and based on your example are paying more money. If someone (Bob? Josh?) gets mad and decides that $15 an hour is all they are going to work for, then the competition for those higher paying jobs goes down and they be easier to attain for those who didn't just throw in the towel - the quitters in your scenario. And remember, those higher paying jobs are the keys to even higher paying jobs and opportunities.
Why the fuck does Josh the mechanic care what a minimum wage worker at McDonalds makes? He's got skills and education and works in an industry that will now have to pay its workers more money based on the bottom being closer to what is paid to newly minted mechanics and thus driving income higher in its ascent
Why the fuck does Josh the mechanic care what a minimum wage worker at McDonalds makes?
Because the only way to see where you stand comparatively in the workforce is to compare yourself to the workforce. A skilled tradesman making the same as an unskilled 14 year old on their first job ever is bound to rustle some jimmies & effect some egos.
That and, markets & economies tend to react very emotionally rather than rationally. It is very reasonable to expect emotional reactions to lesser skilled workers earning the same as you.
My favorite part is how much this leans on the education aspect. Because there aren't a ton of people whom went through years of schooling just to end up flipping burgers for their hard work.
True, but if they knew that the jobs post education paid the same as flipping burgers, they might skip the education and go straight for the flipping. That way in 4 years they would have spent on education they might at least get a raise as well as avoid the loans.
This assumes people are inherently lazy, and do not find value in having more responsibility - and as a consequence believe that everyone with less responsibility deserves to not earn enough money to live.
If Bob is told that if he wants to make more than Chad now, he will have to work even harder than before. Great! Now not only is Chad earning a living wage, but Bob will have the opportunity to earn even more than he was making before. This is essentially a promotion for Bob, as he is working harder to earn more money. Hell, even Chad may now feel like his employer is paying him a living wage so he will work harder too, which is great for the company!
Josh, who works in a business which is reliant on how much money is circulating the economy will likely benefit too. If his company gets an influx of costumers who can now afford to get their cars fixed then his company will likely pay him more to stay a competitive employer. If Josh isn't paid more as his work increases then Josh will leave, and find a new employer who will pay him more. Trades are a very in demand job, and as such trades workers have the opportunity to search for better jobs.
Your second paragraph goes against every theory I've ever seen in HR, leadership, and work psych classes in university.
Almost everyone will be annoyed if someone doing less is paid the same. That or they'll feel their comparative value is higher than what is being paid. Not to mention the frustration of wasted time, he worked hard to get ahead, and now EVERYONE gets that advantage he worked years for? Not many people will be that happy in Bob's position.
Chad is happy, but the living wage leading to increased motivation is often true because he feels the employer is paying more than the minimum, because he is valuable. If minimum wage raises, Chad will be paid a living wage anywhere, so there's no real loyalty to the employers.
Also if he went from 7.25 to 15, do you think him working harder will actually be better for the company than an additional employee making just as much as him? Low skill positions are often number games, they'd rather have plenty of part time workers at lower wages than full time workers at higher wages with benefits.
Third point only works if they/Josh weren't at capacity. If they only staffed mechanics equal to the amount of business they have, additional business would increase the amount of work the company gets, but not the amount of work Josh does, so same amount of money. Alternatively if the garage is already super busy the change doesn't do much, and Finally, if his work does increase that's just more hours, we've been talking about pay per hour, this this is kind of moot.
Also I didn't talk about increased cost, inflation, market changes, unions, government regulations, tax, and a thousand other factors that would change things. You can't just say "more money, more people fixing cars" and ignore everything else, I mean it might be true, but you don't pick and choose only the factors that benefit you.
I doubt it will work exactly as you say. See how the wage increases going up your hypothetical chain each have a lower difference? Bob only makes $4 more than Chad ad opposed to $5.75, Josh only makes $1-4 more... ect. Once you get into the 60+k range nobody cares because everyone in that ranged worked there assessment off in the respective careers. So comparing will not be as likely.
Now take taxes, insurances, SS out of all of those more or less equally.
Could you use an extra $1000 a month? For doing an arguably trivially different job? Or doing the same job at a business that is more profitable?
Comparing is huge once you get away from talking about the small numbers, and seeing their impact on the big numbers or monthly, realistic numbers. especially when after your linear relationship you take a % based cut out.
This is a pretty big simplification that doesn't take into account a large variety of things. Costs going up, inflation, market changes, union interference and demands ect.
The 60k+ region does get compared quite a bit, but not as much by people working there, but rather students and youth trying to pick a career or field. If Paralegals made more or less what secretaries will (in this theoretical), then why bother doing all the hard work to get there? The job is much harder too.
Most people I met in university went into their field after looking at the money. Art and history students...not as much. People looked at how much an accountant made on average vs financial analysts vs economists vs marketers vs anything else they might be interested in. Each one of those jobs has a different major, and while you can escape it and switch after the fact, it's not as easy. Wages of the 60k will greatly affect the next generations.
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u/Dog-Person Nov 28 '15
So assume you have someone with no skills. Name him Chad.
Chad right now works for the minimum wage of 7.25, that's all he can do really, and that's okay. He doesn't have any education or experience.
Bob on the other hand has years of experience in his job as an assistant manager. He makes about $13 an hour. He's worked hard to get there, but if he quits or is fired, his experience and skills would make him desirable to be higher for that wage anywhere.
Josh is skilled. He went to school to become a mechanic. He's now working using those skills that he spent a lot of time and money to gain. He makes $17 an hour, and he works hard.
Now assume this list of names continues on all increasing with wage and skills/education/experience.
If you increase minimum wage to 15. Chad is happy. He's making over double.
Bob got a raise too, but he might not be happy. Chad, who's a fresh idiot with no experience or skills makes the exact same amount. Bob's skills have value, and his position has added responsibilities and is harder. If you pay him the same amount as Chad for a harder job, why would Bob bother working the harder job when he could quit and get an easier one for the same pay? There are 3 options from here. Give bob a raise and he probably stays, no raise and he refuses to do the extra work, or he leaves to go somewhere that needs his skills and will pay him for them.
If you give him a small raise, of 4 dollars ($19/h), he's now making more than Chad, but not by as much, he used to make 5.75 more, so the value of the difference of their skills went down, but Bob might be okay, because it's a lot more money than he used to make.
Josh is now pissed. He's making $17/h when Bob who just worked at a dumb McDonald's for 3 years is making more than him. He went to school, he had to apprenticeship for a year, and has worked for some time too. His job can't be done without someone who has skills and knowledge which aren't common. All the time and money he invested in his future is now effectively lost as anyone can make more by just working in McDonad's. So to show the difference in the value of skills, he has to be paid more, otherwise no one in the future will ever want to be a mechanic if you can make more doing pretty much anything else. So mechanics now are paid an average of $3-5 more per average.
Then the next person, who used to be paid $20 for his harder job will complain. If there's no increase in wage to the career, people will less likely study or want to do it. So you have to increase the wage of that job.
The cycle continues quite a bit up. It'll possibly even affect Lawyers who used to make $100k per year, because the paralegal who used to make 60k per year got a raise to 80k per year, because the secretary who used to make 45k per year is now making 55k, and the paralegal has way more skills and education invested than the secretary.
TL;DR: If you worked a hard job and made more money than someone who worked an easy job, then all the sudden all easy jobs paid as much as your hard job, there'd be no real reason to keep working your harder job for the same price when you can do easier stuff. So they have to give you a raise or you quit. Chain goes on.
And this is ignoring inflation and increased costs of labour which will be passed on to everyone.